Schwieterman: Cash feeder prices significantly higher

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Corn                                                Estimated Fund Position
Short Term: Up                             Net Long Futures and Options: 23578
Long Term: Down                         Change: +15000
Overnight Trade: N -4 Z -4 1/4 @7:15 AM
Opening Calls: 3-5 Lower

Strength in the Dollar put pressure on the corn overnight. However, yesterday’s gains were impressive, especially in the December contract, which closed above the 50-day moving average for the first time since March. The weather, and the forecasts, are not ideal which is supportive to the corn. Traders still have one eye on the financial markets and that won’t change any time soon. Look for weakness during the day and short covering heading into the close as traders prepare for Sunday nights forecast.

Wheat                                                Estimated Fund Position
Short Term: Down                           Net Long Futures and Options: -38999
Long Term:Up                                  Change: +4000
Overnight Trade: Chicago: N -10 KC: N -11 1/4 @7:15 AM
Opening Calls: 10-15 Lower

Yesterday the July KW broke out of the consolidation pattern, but gave up the gains overnight. It is still hard to rally wheat during harvest, especially when the outside markets are working against the wheat. I look for the wheat to have directionless trade until Tuesday’s supply and demand report.

Soybeans                                             Estimated Fund Position
Short Term: Up                                   Net Long Futures and Options: 182432
Long Term:Up                                     Change: +10000
Overnight Trade: N -12 1/4 X -16 1/4 @7:15 AM
Opening Calls: 10-15 Lower

The soybeans were very impressive yesterday. The July contract nearly reached the 62% retracement of the last move down. The weakness overnight looks like a pause before further gains. The weather and the demand are both supportive and a retest of the highs is likely. Tuesday’s supply and demand report is a concern, but the numbers should be no worse than neutral. Buy breaks.

Live Cattle
Short Term: Up
Long Term: Up
Opening Calls: Mixed

Live cattle futures closed sharply higher on Thursday, spurring cash trade of mostly $1.00 higher in the entire region. The triple digit gains in the front four months were new two week highs. Cutouts remain firm, with choice continuing to gain of select. Overnight trade has been mixed, with a strong Dollar and weak equities battling improved cash information. Look for choppy trade, with a supportive bias.

Feeder Cattle
Short Term: Up
Long Term: Up
Opening Call: Mixed

Feeder cattle futures jumped on the band wagon on Thursday, posting sharply higher closes. The cash index strength more than offset the sharp gains in new crop corn values. Customers report cash feeder prices jumping significantly over the past couple of days. The past 3 days have posted the same high in the August feeders of 159.35. Triple tops are usually taken out. Look for strength to be extended.

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